We're so happy, even when we're smilin' out of fear

The world in Lorde lives in now is seemingly perfect, she has no real hardships. Lorde and her generation all stand in similar ground so their life focus is on appearing happy. They/We are happy, despite whatever hardships — hard or easy — they may face and have to overcome.

Having the façade of happiness is something which is incredibly prominent with teenagers, thus the front of happiness, even when they should be scared, maintains their position in the social hierarchy of high school.